Conciliation Proceedings
🔷 What Are Conciliation Proceedings?
Conciliation is a form of Alternative Dispute Resolution (ADR) where parties to a dispute attempt to reach a mutually acceptable settlement with the assistance of a neutral third party called the Conciliator.
Unlike arbitration or litigation, conciliation is voluntary and non-binding unless an agreement is reached and recorded.
🔷 Legal Framework Governing Conciliation in India
1. The Arbitration and Conciliation Act, 1996
Part III (Sections 61 to 81) of the Act deals specifically with conciliation proceedings.
The Act codifies the law relating to arbitration and conciliation.
It provides the procedure for appointment of conciliators, conduct of proceedings, and enforcement of settlement agreements.
2. Other Statutory References
Conciliation is also provided under other statutes like the Industrial Disputes Act, Consumer Protection Act, and Family Courts Act for specific types of disputes.
🔷 Key Features of Conciliation Proceedings
| Feature | Explanation |
|---|---|
| Voluntary | Parties participate voluntarily; no compulsion. |
| Neutral Third Party | Conciliator facilitates settlement but does not impose decisions. |
| Informal | Less formal than courts or arbitration. |
| Confidential | Proceedings are private and confidential. |
| Flexible Procedure | Parties and conciliator decide the process. |
| Non-binding | Unless settlement agreement is signed. |
| Finality | Settlement agreement is enforceable as a contract. |
🔷 Procedure for Conciliation (Under Arbitration and Conciliation Act)
Initiation:
Parties may agree to conciliation after a dispute arises, or it may be stipulated in a contract.
Either party can request conciliation by notifying the other party.
Appointment of Conciliator(s):
Parties mutually appoint one or more conciliators.
If parties fail, the Chief Justice or designated authority appoints.
Conduct of Proceedings:
Conciliator holds meetings with parties, explores the issues.
Encourages open communication and negotiation.
May propose solutions or draft settlement terms.
Settlement Agreement:
If parties agree, terms are reduced to writing.
The settlement agreement is signed by parties and conciliator.
It is binding and enforceable as a contract.
Failure to Settle:
If no settlement is reached, parties are free to approach court or arbitral tribunal.
🔷 Important Judicial Pronouncements on Conciliation
✅ Rashtriya Ispat Nigam Ltd. v. Verma Transport Co. (2002) 5 SCC 332
Supreme Court emphasized the voluntary nature of conciliation.
Court held that conciliation cannot be forced on parties.
Conciliation must be conducted in good faith to reach a fair settlement.
✅ Salem Bar Association v. Union of India (2005) 6 SCC 344
The court highlighted the importance of conciliation in reducing court pendency.
It acknowledged conciliation as a speedy and effective means of dispute resolution.
✅ Union of India v. Hardy Exploration and Production (India) Inc. (2017) 11 SCC 247
Supreme Court clarified that the conciliation proceedings are confidential.
Settlement agreements arising from conciliation are binding.
Courts should encourage parties to adhere to conciliation agreements.
✅ ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705
While the case mainly deals with arbitration, it emphasized the importance of honouring alternative dispute resolution processes including conciliation.
Courts should not easily interfere with settlements reached via conciliation or arbitration.
🔷 Advantages of Conciliation
Cost-effective compared to litigation.
Saves time and reduces backlog.
Maintains business relationships.
Confidential and private.
Flexible and informal.
Parties control the outcome.
🔷 Limitations and Challenges
No binding decision unless settlement is signed.
Requires genuine willingness from both parties.
If parties are not cooperative, it may fail.
May not be suitable for very complex or criminal disputes.
🔷 Conclusion
Conciliation proceedings offer a pragmatic and amicable way to resolve disputes without the need for prolonged litigation or arbitration. Indian law supports and encourages conciliation under the Arbitration and Conciliation Act, 1996, emphasizing voluntariness, confidentiality, and enforceability of settlement agreements.
Courts have consistently underscored the value of conciliation in easing the burden on the judiciary and fostering amicable dispute resolution.
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